Warning is issued on private-equity deals

This won’t make investors in high-yield junk bonds feel warm and fuzzy.

“Frankly, we are all feasting off the imprudence of our lenders,” said Steven Rattner, managing principal of private-equity firm Quadrangle Group, at a forum on hedge funds and private-equity investing in New York on Wednesday.

Speaking of the boom in private-equity-led takeovers of public companies -- deals often financed with junk bonds -- Rattner said investors and lenders “are subsidizing our transactions and are allowing us to make deals that wouldn’t have made any sense” otherwise.

He called the surge in private-equity deals “an accident waiting to happen.” And of the lenders and investors providing credit for the deals, he said: “Of all the bubbles, the bubble in the credit market today is one of the greatest. It is beyond any rational measure.”